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The tax evasion social multiplier: Evidence from Italy



Type:   Article
Titre:   The tax evasion social multiplier: Evidence from Italy
Auteur(s):   Galbiati, Roberto (1977-...) - Université Paris Nanterre (UPN) (Auteur)
Zanella, Giulio - University of Bologna, Department of Economics (Auteur)
In:   Journal of Public Economics
Date de publication:   2012-06
Éditeur:   PAYS-BAS  :  Elsevier
ISSN:   00472727
DOI:   10.1016/j.jpubeco.2012.01.003
Mots-clés:   [en] Social interactions, Neighborhood effects, Social multiplier, Tax evasion, Tax compliance, Excess variance
JEL:   H26,  C31,  Z13,  Z19
Résumé:   [en] We estimate social externalities of tax evasion in a model where congestion of the auditing resources of local tax authorities generates a social multiplier. Identification is based on a contrast of the variance of tax evasion at different levels of aggregation. We use a unique data set that contains audits of about 80,000 small businesses and professionals in Italy and also provides an exact measure of reference groups in our model. We find a social multiplier of about 3, which means that the equilibrium response to a shock that induces an exogenous variation in mean concealed income is about 3 times the initial average response. This is a short-run effect that persists to the extent that auditing resources are not adjusted to internalize the congestion externality.


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